[General Awareness/Interviews/NICL/NABARD] - Budget 2015 Part-1

"कुछ तो फ़ूल खिलाए हमने,  और कुछ फूल खिलाने हैं ,मुश्किल यह है बाग में अब भी ,काटें कई पुराने हैं "

These were the starting lines with which Finance Minister, Mr.Arun Jaitely commenced his Budget speech.

Flanked by a tight fiscal situation and given the compulsions of balancing the often discordant demands of investors,stock markets and the common man on the one hand and the need for fiscal consolidation,high GDP and providing the boost for growth, on the other ! It is against this backdrop that the budget must be viewed.

Let us have a look at major highlights of the Budget 2015-16.

Disclaimer: I won't mention each and every point of Budget, I am here only explaining the important parts and there implications.

JAM will provide boost to finance sector and banking and potentially extend the reach of e-commerce to rural masses.

Most of the points above are self-explanatory except GST and its importance



What is GST ?

Goods and Services Tax is a system of taxation where there is single tax in the economy for goods as well as services.
In India there are multiple Indirect taxes plus separate tax powers to both Centre and States.This causes effective tax to be high.Also there is a cascading effect.Let's see how ?

What is GAAR ?

General Anti-Avoidance Rules empowers Income Tax Commissioners to take action against people involved in Tax avoidance.
GAAR has been deferred on the ground that investment sentiment has turned positive and needs to be accelerated.(ऊँगली by IT Officers may annoy Investors)
 (Details Later)

Defence 

“We have been overdependent on imports, with its attendant unwelcome spin offs. We are thus pursuing the ‘Make in India policy’ to achieve greater self-sufficiency in the area of defense equipment,” Arun Jaitley stated during his speech.

Economics, Opportunities and Infrastructure

Corporate Tax to be reduced to 25 % from 30 % accompanied by rationalization and removal of exemptions.This would be done in a phased manner within 4 years => As it was very high compared to other nations ; It might attract investors as well.

SETU(Self Employment and Talent Utilization Scheme) => Allotted Rs.1000 crore for incubating Tech start-ups.

Public ports would be encouraged to corporatize and come under companies act.

Forward Market Commission (Regulates Commodity Market) will be merged with SEBI (Regulates Capital Market).

Nayi Manzil Scheme : For providing employment opportunities to minority students who don't have formal school leaving certificate

5 Ultra Mega Power Plug and Play Projects => 4000 Megawatts capacity

Abolished Wealth Tax and replaced it with extra 2 % surcharge (10 % already +2 %) =  12 % surcharge on the tax collected from super-rich over 1 crore.

Let's understand why Wealth Tax was abolished ?

Rate of Income on Royalty and fees for technical services reduced from 25 % to 10 % to facilitate Technology inflow.

Extension of SARFESI Act ( Under this act NBFC will have power to take possession of defaulters assesses without any court order)  to NBFC (Non Banking Financial CompanY) and Comprehensive Bankruptcy Code  => Enhance confidence of the lending units and discourage willful defaulters.

Plan to set up an autonomous Bank Board Bureau which will search and select the heads of Public Sector Banks and help them in making strategies and capital raising plans through innovative financial methods and schemes.

Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of `20,000 crores, and credit guarantee corpus of `3,000 crores to be created.
In lending, priority will be given to SC/ST enterprises.
MUDRA Bank will be responsible for refinancing all Micro-finance Institutions which are in the business of lending to such small entities of business through a Pradhan Mantri Mudra Yojana.

A Trade Receivables discounting System (TReDS) which will be an electronic platform for facilitating financing of trade receivables of MSMEs to be established.
(For details read : http://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2860)

Excise duty increased to 12.5 % and Service Tax increased to 14 % from 12.36 %.(Explained Later)
Gold

1. Gold Monetization Scheme : Deposit Gold and earn fixed interest
2. Sovereign Gold Bond => Alternative to purchase real gold ( Fixed rate of interest + Redeemable at the value of Gold)
3. Commence work on Indian Gold Coin (Ashoka Chakra on its face) = > To reduce import of gold minted outside and recycle Indian Gold

Why investment in Gold is problematic ? We will also see provisions of Black Money Bill.

To be continued....